On May 11, 2020, the Centers for Medicare & Medicaid Services (CMS) issued its Fiscal Year (FY) 2021 hospital inpatient prospective payment system (IPPS) and long term care hospital (LTCH) prospective payment system (PPS) proposed rule. We previously reported on the hospital IPPS and LTCH PPS proposed changes. See link here .
In this rulemaking, CMS has also proposed significant changes to Medicare Graduate Medical Education (GME) funding, specifically with respect to the treatment of residents and fellows (collectively, “residents”) who become “displaced” as a result of the closure of their hospital or the closure of the GME program in which they are enrolled.
The Medicare direct GME regulations (42 CFR 413.79(h)) and indirect medical education (IME) regulations (42 CFR 412.105(f)(1)(ix)) enable a hospital that is closing, or that may close one or more of its GME programs (commonly referred to as the “originating hospital”), to temporarily transfer a portion (i.e., resident slots) of its hospital-specific direct GME and IME full time equivalent (FTE) resident cap to other hospitals (commonly referred to as “receiving hospitals”) that accept and train the displaced residents for the duration of the residents’ training programs. This additional temporary direct GME and IME funding – the GME reimbursement “bump” – incentivizes hospitals to accept residents displaced by closure of the originating hospital or closure of its residency program.
A receiving hospital is eligible for additional direct GME and IME payments only for training a “displaced resident.” While the regulations currently do not define “displaced resident,” CMS policy is that a displaced resident is: (i) a resident who is physically present and training at the originating hospital on the day prior to or the day of hospital or GME program closure; or (ii) a resident who would have been physically present and training at the originating hospital on the day prior to or the day of hospital or GME program closure, but is on approved leave. Under CMS’ current policy, a displaced resident does not include: (i) a resident who left his/her GME program to continue training at another hospital before the actual closure of the originating hospital or program; (ii) a resident who is assigned to and training at planned rotations at other hospitals, who does not return for training at the originating hospital or program the day before or day of hospital or program closure; and (iii) a medical student (i.e., prospective resident) or prospective fellow who matched into a GME program at the originating hospital but has not yet started training at the originating hospital or the GME program.
CMS proposes two significant changes to its current GME payment policy regarding closing teaching hospitals and closing residency programs, the net effect of which will make it easier for residents to qualify as “displaced residents” for Medicare temporary FTE resident cap transfer purposes:
- First, a “displaced resident” would be a resident who was training in the hospital in the residency program on the day that the hospital or program closure was publicly announced (for example, via a press release or a formal notice to the Accreditation Council on Graduate Medical Education), rather than requiring physical presence at the originating hospital on the day before, or the day of, hospital or program closure. To effectuate this policy change, CMS proposes to add the definition of a “displaced resident” in the Medicare direct GME regulations. IME regulations are linked to the direct GME regulations, so the new definition would apply to IME FTE cap transfers as well. The Medicare direct GME regulations (42 CFR 413.79(h)(1)(iii)) would define a “displaced resident” as a resident who meets one of the following conditions:
- Leaves a program after the hospital or program closure is publicly announced, but before the actual hospital or program closure;
- Is assigned to and training at planned rotations at another hospital, but will be unable to return to his/her rotation at the closing hospital or program;
- Is matched into a GME program at the originating hospital or program but has not yet started training there;
- Is physically training in the originating hospital on the day prior to or the day of program or hospital closure; or
- Is on approved leave at the time of the announcement of closure or actual closure, and therefore, cannot return to his/her rotation at the closing hospital or program.
- Second, CMS proposes to revise the information that a receiving hospital has to provide to its Medicare Administrative Contractor (MAC) in applying for the temporary increase in its direct GME and IME FTE caps. To apply for the temporary increase, the receiving hospital has to submit a letter to its MAC within 60 days of beginning the training of the displaced residents, which includes: (i) the names and Social Security numbers of the displaced residents; (ii) the hospitals and programs in which the residents were previously training; and (iii) the amount of the FTE cap increase needed for each resident (based on how much the receiving hospital exceeds its caps and the length of time for which the adjustments are needed). CMS proposes, for the protection of PII, that the receiving hospital would not have to provide the full Social Security number for a displaced resident, but rather only the last four digits.
In the preamble to the proposed rule, CMS notes that under its current policy the maximum number of FTE resident cap slots that are available to be transferred to all receiving hospitals is the number of direct GME and IME FTE resident cap slots that belong to the originating hospital or closing GME program(s). Consequently, if the originating hospital is training residents in excess of its FTE caps, there is no guarantee that a cap slot will be transferred with a displaced resident. The originating hospital has the sole discretion to transfer a cap slot if one if available. In addition, if the originating hospital decides to transfer a cap slot, it is the responsibility of the originating hospital to determine how much (if any) of an available cap slot is transferred with a particular resident. CMS also provides a reminder that only to the extent a receiving hospital would exceed its FTE cap by training displaced residents would the receiving hospital be eligible for the temporary cap increases.
The proposed rule will be published in the Federal Register on May 29 and public comments are due to CMS by July 10. The proposed rule can be downloaded from the Federal Register at link here and a CMS Fact Sheet summarizing the rulemaking is available at link here. CMS has established a home page for the proposed rule, which is available at link here.